Stating that home prices are high, Reserve Bank deputy governor S S Mundra today said there is a need for price correction, especially given the high inventory levels with developers.

"I believe there is enough scope for home prices to come down from the higher perch because of huge inventory pile-up in several markets," he said addressing a gathering of realty players in the financial capital.

"In a country where over 60 per cent of the population lives with less than $ 2 a day, the cost of houses are still pretty high," he said, pointing to an RBI report which said there was a huge shortage of dwelling units.

Mundra said that housing shortage is very severe among the weaker sections. Findings of an internal RBI panel report indicated that over 58 per cent of people from the economically weaker sections and over 39 per cent from the low-income groups do not have access to housing, he said.

The senior RBI official, who assumed office on July 31, a day before he was to retire from the state-run Bank of Baroda as its chairman, said developments in construction technologies should make it possible for developers to bring down home prices.

The central banker also spoke out strongly against the practice of loans for a second and third house, saying bank credit must be used for "productive purposes" and not for "speculation".

"You must realise that at the current stage of development of our country, we need bank credit more for creation of productive assets and less for speculative activities. We would not like to create a situation where bank finance is being used by a selected few for buying several houses as an investment and thereby creating artificial demand bubble," he said.